ANNEX II.1.

1F
Section VI. General Conditions of Contract
Notes on the General Conditions of Contract (GCC)
The GCC provides the general terms and conditions ofthe contract between the Procuring Entity
and the winning bidder.

The provisions of the GCC are to be used unchanged as part of the contract-specific BDs.

To supplement the GCC, the Special Conditions of Contract (SCC) in ANNEX II-l.lG
provide detailed information or requirements on particular provisions of the GCC that are
specific to the contract at hand.
 STANDARD FORMAT

GENERAL CONDITIONS OF CONTRACT

TABLE OF CONTENTS
l. Definitions.....
2. Interpretation
3. Goveming Language and Law
4. Communications
5. Procuring Entity's Obligation to Deliver the Site, Materials, Equipment, and
Plans

6. Contractor's Obligations
7. Performance Security
8. Sub-Contracting...........
9. Liquidated Damages
10. Site Investigation Reports

I 1. Licenses and Permits

12. Contractor's Risk and Warranty Security
13. Liability of the Contractor
14. Procuring Entity's fusk.....
15. Insurance
16. Termination for Default of Contractor
17. Termination for Default ofProcuring Entity
18. Termination for Convenience
19. Procedure for Termination ofContracts
20. Force Majeure and Release from Performance
21. Payment on Termination
22. Resolution of Disputes
23. Suspension of Loan, Credit, Grant, or Appropriation

24. ProcuringEntity's Representative'sDecisions

25. Approval of Drawings and Temporary Works by Procuring Entity's
Representative.
26. Acceleration Ordered by Procuring Entity's Representative
27. Extension of Intended Completion Date
28. Contractor's Right to Claim
29. Daywork
30. Early Waming
31. Program of Work
32. Management Conferences
JJ. Bill of Quantities ..................
34. Instructions, Inspections and Audits
35. Identifi cation of Defects
36. Cost of Repairs

37. Conection of Defects

38. Unconected Defects ..........
39. Advance Payment
40. Monthly Statements or Progress Billings ..........
41. Monthly Certificates and Progress Payments
42. Retention
43. Variation Orders ...........
44. Punch List.......
45. Suspension of Work

46. Extension of Contract Time

47. Price Adjustment ..

48. Certificates of Completion and Acceptance

49. Taking Over
50. "As-Built" Drawings and Operating and Maintenance Manuals
 GENERAL CONDITIONS OF CONTRACT
1. Definitions
1.1 Arbiter is the person appointed jointly by the Procuring Entity and the Contractor
to resolve disputes in the first instance.

1.2 As-Built Drawings refer to the engineering plans for the structure as actually
constructed and completed under this Contract, considering all variations and
modifications as approved and executed.

1.3 Bill of Quantities refers to a list of the specific pay items of the Works under this
Contract, particularly their identification numbers, descriptions, units of
measurement, and quantities, together with their corresponding unit and total
bid prices.

1.4 Certificate of Completion is the document issued by the procuring Entity,

certifying that the Works have been completed, including correction of all
Defects, as of the end of the Contract Time with approved time extensions, in
accordance with the provisions of this Contract.

1.5 Certificate of Acceptance is the document issued by the procuring Entity,

certifying that the Works have been completed, including correction of all
Defects, as of the end of the Defects Liability period, in accordance with the
provisions of this Contract, and that, therefore, the completed Works are
accepted by the Procuring Entity.

1.5 contract is the legal agreement between the procuring Entity and the contractor to
execute, complete, and maintain the works. It consists of the documents listed
in GCC Clawe 2.2.

1.6 contract Price is the price stated in the Notice of Award and thereafter to be paid
by the Procuring Entity to the contractor for the execution of the works in
accordance with this Contract.

1.7 contract Time is the allowable period or duration within which the contract
works must be completed, i.e., from the Start Date to the Intended completion
Date as specified in the SCC.

1.8 contractor is the juridical entity whose bid has been accepted by the procuring
Entity and to whom this contract to execute the work was awarded. enterel
into. and approved.

1.9 contractor's Bid is the signed offer or proposal submitted by the contractor
to the
Procuring Entity in response to the Bidding Documents.

f.10 Days are calendar days.

 1.ll Dayrvorks are varied work inputs subject to payment on a time basis for the
Contractor's employees and Equipment, in addition to payments for associated
Materials and Plant.

l.l2 Defect is any part ofthe works not constructed in accordance with this contract.

1.13 Defects Liability certificate is the certificate issued by procuring Entity,s

Representative upon correction ofdefects by the Contractor.

1.16 Defects Liability Period is the one-year period after the issuance of the
Certificate of Completion during which the Contractor assumes the
responsibility to undertake the repair ofany defect in or damage to the works at
his own expense as a condition for the issuance ofthe certificate ofAcceptance.

1.17 Drawings are graphical presentations of the works. They include all engineering
plans, supplementary details, shop drawings, calculations, and other information
provided or approved for the execution of this Contract.

1.18 Equipment refers to all machines, tools, facilities, supplies, appliances, and
related items required for the execution and completion of the works provided
by the contractor and which shalr not lorm or are not intended to form part of
the Permanent Works.

1.19 Intended completion Date refers to the date specified in the scc when the
contractor is expected to have completed the works. The Intended completion
Date may be revised only by the procuring Entity's Representative by issuing
an extension of Contract Time or an acceleration order.

1'20 Materials are all supplies, including consumables, used by the contractor for
incorporation in the Works.

1.21 Notice to Proceed is a written notice issued by the procuring the procuring
Entity's Representative to the contractor requiring the latter to begin the worki
not later than the date specified in this Notice.

1.21 Permanent works refer to all permanent structures and all other project
features
and facilities required to be constructed and completed in accordance with
this
contract which shalr be delivered to the procuring Entity and which shall
remain at the Site after the removal of all Temporary Works.

l'22 PERT/CPM is the acronym for program Evaluation Review Technique/critical

Path Method and is a technique for planning, scheduling, and controlling
a
project, involving a network of interrelated activities with
iheir start and fin]sh
times. The critical path is the longest time path through the network of
activities.
1.23 Plant refers to the machinery, apparatus, and the like intended to form an integral
part of the Permanent Works.

1.24 Procuring Entity is the party that engages the Contractor to carry out the Works
stated in the SCC.
1.25 Procuring Entity's Representative refers to the Ho
PE or his duly authorized representative, identified in the SCC, who shall be responsible
for supervising the execution of the Works and administering this Contract.

1.26 Site is the righrof-way or place provided by the Procuring Entity where the
Works shall be executed and any other place or places which may be designated
in the SCC, or notified to the Contractor by the Procuring Entity's
Representative, as forming part ofthe Site.

1.27 Site Investigation Reports are factual and interpretative reports about the surface
and subsurface conditions at the Site, which are provided by the Procuring
Entity in the Bidding Documents.

1.28 Slippage is a delay in work execution occurring when actual accomplishment falls
below the target as measured by the difference between the scheduled and
actual accomplishment of the Works by the Contractor as established from the
work schedule. This is actually described as a percentage ofthe whole Works.

1.29 Specifications mean the description of the Works to be done, qualities of

materials to be used, equipment to be installed, construction methods,
workmanship, and finished product required under this Contract.

1.30 Start Date, as specified in the SCC, is the date when the Contractor is obtiged to
commence execution of the Works. It is the same as the effectivity date of the
Contract as stated in the Notice to Proceed. It does not necessarily coincide with
any of the Site Possession Dates.

1.31 Sub-Contractor is any person or organization to whom a part of the Works has
been subcontracted by the Contractor for execution, as allowed by the Procuring
Entity, but not any assignee of such person.

1.32 Temporary Works are works designed, constructed, installed, and removed by
the Contractor that are needed for the construction or installation of the
Permanent Works.

1.33 Work(s) refer to the Permanent Works and Temporary Works to be executed by
the Contractor in accordance with this Contract, including (i) the fumishing of
all labor, materials, equipment and others incidental, necesse[y or convenient to
the complete execution of the Works; (ii) the passing of any tests before
acceptance by the Procuring Entity's Representative; (iii) and the carrying out
 of all duties and obligations of the Contractor imposed by this Contract as
described in the SCC.

.,
Interpretation
2.1 In interpreting the Conditions of Contract, singular also means plural, male also
means female or neuter, and the other way around. Headings have no
significance. Words have their normal meaning under the language of this
Contract unless specifically defined. The Procuring Entity's Representative
will provide instructions clarifying queries about the Conditions ofContract.
2.2 If sectional completion is specified in the SCC, references in the Conditions of
Contract to the Works, the Completion Date, and the Intended Completion Date
apply to any Section of the Works (other than references to the Completion Date
and Intended Completion Date for the whole of the Works).

,1 The documents forming this Contract shall be interpreted in the following order of
priority:

a. Contract Agreement

b. Documents forming part of the Contract Agreement

(1) Notice of Award (NOA) with the Contractor's signed

"conforme"

(2) Contractor's Bid in the Form of Bid, including its

Technical and Financial Proposals, as calculated by the
Procuring Entity and conformed to by the Contractor through
the NOA

(3) Bidding Documents (other than b( ) to b(7) below) and

Bulletins

(4) Specifrcations

(5) Drawings

(6) Special Conditions of Contract (SCC)

(7) General Conditions of Contract (GCC)

(8) PerformanceSecurity

C Other Documents

(l ) Construction Methods
 (2) Construction Schedule in the form of PERT/CPM
Diagram or Precedence Diagram and Bar Chart with S-Curve.

(3) Manpower Schedule

(4) EquipmentUtilizationSchedule

(5) Construction Safety and Health Program initially

approved by the HoPE

(6) Contractor's All Risk Insurance (CARI)

3 Governing Language and Law

3.1 This Contract has been executed in the English language, which shall be the binding
and controlling language for all matters relating to the meaning or interpretation
of this Contract. All correspondence and other documents pertaining to this
Contract which are exchanged by the parties shall be written in English.

3.2 This Contract shall be interpreted in accordance with the laws of the Republic of the
Philippines.

4. Communications
Communications between parties that are referred to in these Conditions of Contract
shall be effective only when in writing. A notice shall be effective only when it is
received by the concemed party.

5. Procuring Entity's Obligation to Deliver the Site, Materials, Equipment,

and Plans and to Obtain the Environmental Compliance Certificate
(ECC)
5.1 On the date specified in the SCC, the Procuring Entity shall grant the Contractor
possession of so much of the Site as may be required to enable it to proceed
with the execution of the Works. If the Contractor suffers delay or incurs cost
from failure on the part ofthe Procuring Entity to give possession in accordance
with the terms of this clause, the Procuring Entity's Representative shall give
the Contractor a Contract Time Extension and certifu such sum as fair to cover
the cost incurred, which sum shall be paid by Procuring Entity.

5.2 If possession of a portion is not given by the date stated in SCC Clause 5.1, the
Procuring Entity will be deemed to have delayed the start of the relevant
activities. The resulting adjustments in contract time to address such delay shall
be in accordance with GCC Clause 46.
 5.3 The Contractor shall bear all costs and charges for special or temporary right-ofway
required by it in connection with access to the Site. The Contractor shall also
provide at its own cost any additional facilities outside the Site required by it for
purposes of the Works.

5.4 The Contractor shall allow the Procuring Entity's Representative and any person
authorized by the Procuring Entity's Representative access to the Site and to
any place where work in connection with this Contract is being carried out or is
intended to be carried out.

5.5 The Procuring entity shall be responsible for obtaining the appropriate
Environmental Compliance Certificate (ECC) for the Project.

6 Contractor's Obligations
6.1 The Contractor shall carry out the Works properly and in accordance with this
Contract. The Contractor shall provide all supervision, labor, Materials, Plant and
Equipment, which may be required. All Materials and Plant on Site shall be
deemed to be the property ofthe Procuring Entity.

6.2 The Contractor shall commence execution of the Works on the Start Date and shall
carry out the Works in accordance with the approved PERT/CPM network
diagram submitted by the Contractor, as updated with the approval of the
Procuring Entity's Representative, and shall complete the Works by the
Intended Completion Date.

6.3 The Contractor shall be responsible for the safety ofall activities on the Site.

6.4 The Contractor shall cany out all instructions of the procuring Entity,s
Representative that comply with the applicable laws where the Site is located.

6.5 The Contractor shall employ the key personnel, named in the Schedule of Key
Personnel in the SCC, to carry out the supervision of the Works. The procuring
Entity will approve any proposed replacement of key personnel only if their
relevant qualifications and abilities are equal to or better than those of the
personnel listed in the Schedule.

6.6 If the Procuring Entity's Representative asks the Contractor to remove a member of
the Contractor's staff or work force, for justifiable cause, the Contractor shall
ensure that the person leaves the Site within seven (7) days and has no further
connection with the Work in this Contract.

6.7 During Contract implementation, the Contractor and its subcontractors shall abide
at all times by all labor laws, including child labor related enactments, and other
relevant rules.
 6.8 The Contractor shall submit to the Procuring Entity for consent the name and
particulars of the person authorized to receive instructions on behalf of the
Contractor.

6.9 The Contractor shall cooperate and share the Site with other contractors, public
authorities, utilities, and the Procuring Entity during the dates given in the
schedule of other contractors particularly when they shall require access to the
Site. The Contractor shall also provide facilities and services for them during
this period. The Procuring Entity may modify the schedule of other contractors,
and shall notili/ the Contractor ofany such modification thereto.

6.10 Should anything of historical or other interest or of significant value be

unexpectedly discovered on the Site, it shalt be the property of the Procuring
Entity. The Contractor shall notify the Procuring Entity's Representative of
such discoveries and carry out the Procuring Entity's Representative's
instructions in dealing with them.
7 Performance Security
7.1 The Contractor shall submit its Performance Security to the Procuring Entity not
later than the date specified in the Notice of Award and shall be issued in any of
the following forms and corresponding amounts in ITB Clause 34.

7.2 The Performance Security posted in favor ofthe Procuring Entity shall be forfeited
in the event it is established that the Contractor is in default in anv of its
obligations under the Contract.

7.3 The Performance Security shall remain valid until issuance by the Procuring Entity of
the Certificate of Final Acceptance.

7.4 The Performance Security may be released by the Procuring Entity and retumed to
the Contractor after the issuance of the Certificate of Final Acceptance, subject
to the following conditions, provided that the Performance Security is replaced
by a Warranty Security against structural defects and./or failure as provided in
GCC Clause l2:

a. There are no pending claims against the Contractor or the surety

company fited by the Procuring Entity;

b. The Contractor has no pending claims for labor and materials filed
against it; and

c. Other terms specified in the SCC.

7.5 The Contractor shall post an additional Performance Security following

the amount and form specified in ITB Clause 34 to cover any cumulative
increase of more than ten percent (10%) over the original value of the contract
as a result of amendments to order or change orders, extra work orders and
 supplemental agreements, as the case may be. The Contractor shall cause the
extension of the validity of the performance security to cover approved contract
time extensions-

7.6 In case of a reduction in the contract value or for partially completed

Works under the contract which are usable and accepted by the Procuring Entity
the use of which, in the judgment of the implementing agency or the Procuring
Entity, will not affect the structural integrity ofthe entire project, the Procuring
Entity shall allow a proportional reduction in the original performance security,
provided that any such reduction is more than ten percent (10%) and that the
aggregate of such reductions is not more than fifty percent (50%) ofthe original
Performance Security.

7.7 Unless otherwise indicated in the SCC, the Contractor, by entering into
the Contract with the Procuring Entity, acknowledges the right ofthe Procuring
Entity to institute action pursuant to Act 3688 against any sub-contractors be
they an individual, firm, partnership, corporation, or association supplying the
Contractor with labor, materials and/or equipment for the performance of this
Contract.
8 Sub-Contracting
8.1 Unless otherwise provided in the SCC, sub-contracting of the Works shall be
subject to the provisions of DPWH Department Order (DO) No. 38, series of
2015 as provided below.

8.2 All sub-contracts shall be subject to prior approval of the appropriate official of the
Procuring Entity within the limits of his delegated authority.

8.3 The Contractor may sub-contract portions of the works to such an extent as may be
approved by the Procuring Entity and stated in the SCC, provided that the
Contractor shall directly undertake, using its own resources, not less than fifty
percent (50%) ofthe contract works in terms ofcost.

8.4. Each sub-contractor must comply with the eligibility criteria as specified in the
Eligibility Requirements (ER) for the portion of the contract works to be
subcontracted to that sub-contractor- e.g., applicable license from the
Philippine Constructors Accreditation Board, satisfactory completion of works
similar to the portion of the contract to be subcontracted and costing at least
fifty percent (50%) of the cost of such portion, and sufficient Net Financial
Contracting Capacity, as well as minimum equipment and manpower. This
requirement does not apply to labor pakyaw contracts.

8.5 The bidder/main contractor may identify the sub-contractors to whom portions of
the contract works will be sub-contracted at any stage ofthe bidding process or
during contract implementation, provided that any sub-contracting requires
 prior approval of the Procuring Entity. Sub-contractors identified during the
bidding may be changed during the implementation of the contract, subject to
compliance with the eligibility requirements and the approval of the Procuring
Entity.

8.6 Sub-contracting of any portion olthe contract shall not relieve the main contractor
from any liability or obligation that may arise from the contract. The main
contractor shall be responsible for the acts, defaults, and negligence of any
subcontractor, its agents or workmen.

8.7 For any assignment and sub-contracting ofthe contract or any part thereof without
prior written approval by the concerned Head of the DPWH Procuring Entity,
the DPWH shall impose on the erring contractor, after the termination of the
contract, the penalty of suspension for one (l) year for the first offense, and
suspension of two (2) years for the second offense from participating in the
public bidding process, pursuant to the provision of Appendix l1 Section 4.2
of the IRR of RA 9184, in accordance with Section 69(6) of RA 9184 and
without prejudice to the imposition of additional administrative sanctions as
the intemal rules of the agency may provide and/or further criminal
prosecution as provided by applicable laws.

9. Liquidated Damages

9.1 The Contractor shall pay liquidated damages to the Procuring Entity for each day
that the Completion Date is later than the Intended Completion Date. The
applicable liquidated damages is at least one-tenth (1/10) of a percent ofthe cost
of the unperformed portion for every day ol delay. The total amount of
liquidated damages shall not exceed ten percent (10%) of the amount of the
contract. The Procuring Entity may deduct liquidated damages from payments
due to the Contractor. Payment of liquidated damages shall not affect the
Contractor. Once the cumulative amount of liquidated damages reaches ten
percent (10%) ofthe amount olthis Contract, the Procuring Entity shall rescind
this Contract, without prejudice to other courses of action and remedies open to
it.

9.2 If
the Intended completion Date is extended after liquidated damages have been
paid, the Engineer ofthe Procuring Entity shal correct any overpayment of liquidated damages
by the contractor by adjusting the next payment certificate. 10. Site Investigation
Reports
The Contractor, in preparing the Bid, shatl rely on any Site Investigation Reports referred
to in the SCC supplemented by any information obtained by the c;ntractor.
11. Licenses and Permits
The Procuring Entity shall, if requested by the Contractor, assist it in applying for
permits, licenses or approvals, which are required for the Works. These shall include
assistance to the contractor in securing necessary quarry permits, construction permits,
access to sites, among others, from the Local Govemment Units concemed.

12. Contractor's Risk and Warranty Security

12.1 The Contractor shall assume full responsibility for the Works from the time
project construction commenced up to final acceptance by the Procuring Entity
and shall be held responsible for any damage or destruction of the Works except
those occasioned by force majeure. The Contractor shall be fully responsible for
the safety, protection, security, and convenience of his personnel, third parties,
and the public at large, as well as the Works, Equipment, installation, and the
like to be affected by his construction work.

12.2 The defects liability period for infrastructure projects shall be one year from
contract completion up to final acceptance by the Procuring Entity. During this
period, the Contractor shall start the repair works, at his own expense, of any
damage to the Works on account of the use of materials of inferior quality, and
shall complete the repair works within ninety (90) days lrom the time the Ho

PE has issued an order to undertake repair. In case of failure or refusal to comply with
this mandate, the Procuring Entity shall undertake such repair works and shall
be entitled to full reimbursement of expenses incurred therein upon demand.

12.3 Unless otherwise indicated in the SCC, in case the Contractor fails to comply with
the preceding paragraph, the Procuring Entity shall forfeit its performance
security, subject its properties to attachment or gamishment proceedings, and
perpetually disqualify it from participating in any pubtic bidding. All payables
of the GOP in his favor shall be offset to recover the costs.

12.4 After final acceptance of the Works by the Procuring Entity, the following shall be
held responsible for "Structural Defects", i.e., major faults/flaws/deficiencies in
one or more key structural elements of the project which may lead to structural
failure of the completed elements or structure, or "Structural Failures,"
i.e.,where one or more key structural elements in an infrastructure facility fails
or collapses, thereby rendering the facility or part thereof incapable of
withstanding the design loads, andior endangering the safety ofthe users or the
general public:

a. Contractor - where Structural Defects/Failures arise due to faults

attributable to improper construction, use of inferior quality/substandard
materials, and any violation olthe contract plans and specifications, the
conlraclor shall be held liablel
 b. Consultants - where Structural Defects/Failures arise due to
faulty and/or inadequate design and specifications as well as
construction supervision, then the consultant who prepared the design or
undertook construction supervision for the project shall be held liable;

c Procuring Entitv's Representatives/Proi ect

Manaser/Construction Managel:s and Supervisors -where the Structural
Defects/Failures are due to hisitheir willful intervention in altering the
designs and other specifications; negligence or omission in not
approving or acting on proposed changes to noted defects or deficiencies
in the design and/or specifications; and the use of substandard
construction materials in the project;

d. Third Parties- where Structural Defects/Failures are caused by

work undertaken by them such as leaking pipes, diggings or excavations,
underground cables and electrical wires, underground tunnel, mining
shaft and the like, in which case the applicable warranty to such
structure should be levied to third parties for their construction or
restoration works.

e. Users - where Structural Defects/Failures are due to

abuse/misuse by the end user of the constructed facility and/or non-
compliance by a user with the technical design limits and.ior intended
purpose ofthe same, then the user concemed shall be hetd liable.

12.5 The warranty against Structural Defects/Failures, except those

occasioned on force majeure, shall cover the period specified in the SCC
reckoned from the date of issuance ofthe Certificate ofFinal Acceptance by the
Procuring Entity.

12.6 The Contractor shall be required to put up a warranty security in the

form of cash, bank guarantee, letter of credit, GSIS or surety bond callable on
demand, in accordance with the following schedule:

Form of Warranty Security Amount of Warranty Security

Form of Warranty Securify Amount of Warrant"v Securit"v

l. Cash or letter ofcredit (LC) issued by a
Universal or Commercial Bank,
provided that the LC shall be confirmed Five Percent (5%)
by a Universal or Commercial Bank, if
issued by a forei bank
2. Bank guarantee confirmed by a
Ten Percent (10%)
Universal or Commercial Bank.
 3. Surety bond callable on demand issued
by the GSIS or a surety or insurance
company accredited by the Insurance Thirty Percent (30%)
Commission as authorized to issue such
security.
12.7 The warranty security shall be stated in Philippine Pesos and shall
remain effective for one year from the date of issuance of the Certificate of
Final Acceptance by the Procuring Entity, and retumed only after the lapse of
said one year period.

12.8 In case of structural defectsifailure occurring during the applicable

warranty period provided in GCC Clause 12.5, the Procuring Entity shall
undertake the necessary restoration or reconstruction works and shall be entitled
to full reimbursement by the parties found to be liable for expenses incurred
therein upon demand, without prejudice to the filing of appropriate
administrative, civil, and/or criminal charges against the responsible persons as
well as the forfeiture of the wananty security posted in favor of the Procuring
Entity.

13. Liabilify of the Contractor

Subject to additional provisions, if any, set forth in the SCC, the Contractor's liability
under this Conuact shall be as provided by the laws ofthe Republic ofthe Philippines.

14. Procuring Entity's Risk

From the Start Date until the Certificate of Acceptance is issued, the following are risks
of the Procuring Entity:

a. The risk of personal injury, death, or loss of or damage to property

(excluding the Works, Plant, Materials, and Equipment) which are due to:

(1) any type of use or occupation ol the Site authorized by the

Procuring Entity after the official acceptance of the works; or

(2) negligence, breach of statutory duty, or interference with any

legal right by the Procuring Entity or by any person employed by or
contracted to him except the Contractor.
b. The risk of damage to the Works, Plant, Materials, and Equipment to the
extent that it is due to a fault ofthe Procuring Entity or in the Procuring Entity's
design, or due to war or radioactive contamination directly affecting the
Philippines.
15. Insurance
15.1 The Contractor shall, under his name and at his own expense, obtain and maintain,
for the duration of this Contract, the following insurance coverage:

a Contractor's All Risk Insurance,

b. Transportation to the project Site of Equipment, Machinery, and

Supplies owned by the Contractor;

c. Personal inj ury or death ofContractor's employees; and

d. Comprehensive insurance for third party liabitity to Contractor's

direct or indirect act or omission causing damage to third persons.

15.2 The CARI shall cover the value of the completed portions of the Works.
It shall not, however, cover any damage to the Works whose value is not more
than ten percent (10%) of the Total Contract Cost, as this is to be absorbed by
the Contractor. The CARI shall, therefore, start with nil at the beginning of
Contract execution. It shall then be increased over time as the Works progresses
so that at any time it covers the value of the portions of the Works actually
completed.

15.3 The Contractor shall provide evidence to the Procuring Entity's

Representative that the insurance required under this Contract has been effected
and shall, within a reasonable time, provide a copy of the insurance policy to the
Procuring Entity's Representative.

15.4 The Contractor shall notifu the insurer of changes in the nature, extent,
or program for the execution of the Works and ensure the adequacy of the
insurance at all times in accordance with the terms of this Contract and shall
produce to the Procuring Entity's Representative the insurance policy in force
including the receipts for payment of the current premiums.

15.5 If the Contractor fails to obtain and keep in force the insurance which it
is required to obtain under the terms of this Contract, the Procuring Entity may
obtain and keep in force any such insurance and pay such premiums as may be
necessary for the purpose. From time to time, the Procuring Entity may deduct
the amount it shall pay for said premiums including twenty five percent (250h)
therein from any monies due, or which may become due, to the Contractor,
without prejudice to the Procuring Entity exercising its right to impose other
sanctions against the Contractor pursuant to the provisions of this Contract.

15.6 In the event the Contractor fails to observe the above safeguards, the
Procuring Entity may, at the Contractor's expense, take whatever measure is
deemed necessary for its protection and that of the Contractor's personnel and
third parties, and/or order the intemrption of dangerous Works. In addition, the
 Procuring Entity may refuse to make the payments under GCC Clause 4l until
the Contractor complies with this Clause.

15.7 The Contractor shall immediately replace the insurance policy obtained
as required in this Contract, without need of the Procuring Entity's demand,
with a new policy issued by a new insurance company acceptable to the
Procuring Entity for any ofthe lollowing grounds:

a. The issuer ofthe insurance policy to be replaced has:

(1) become bankrupt;

(2) been placed under receivership or under a management

committee;

(3) been sued for suspension ofpayment; or

(4) been suspended by the Insurance Commission and its

license to engage in business or its authority to issue insurance
policies cancelled; or

b. Reasonable grounds exist that the insurer may not be able, fully
and promptly, to fulfitt its obligation under the insurance policy.

16. Termination for Default of Contractor

16.1 The Procuring Entity shall terminate this Contract for default when any of the
following conditions attend its implementation:

a. Due to the Contractor's fault and while the Works are on-going,
it has incurred a negative slippage of fifteen percent (15%) or more in
accordance with Presidential Decree 1870; or

b. Due to the Contractor's fault and after the Contract time has
expired, it has incurred a negative slippage often percent (10%) or more
in the completion oithe Works; or

c The Contractor:

(1) abandons the Contract Works, refuses or fails to comply with a

valid instruction of the Procuring Entity or fails to proceed
expeditiously and without delay despite a written notice by the
Procuring Entity;

(2) after receiving a

Notice from the Procuring Entity's
Representative that failure to correct a particular Defect is a
fundamental breach of Contract, fails to correct the Defect within a
 reasonable period of time determined by the Procuring Entity's
Representative;

(3) does not actually have on the Site the minimum essential
equipment listed in the Bid necessary to prosecute the Works in
accordance with the approved PERT/CPM network diagram and
equipment utilization schedule as required under the Contract;
(4) does not execute the Works in accordance with this Contract or
persistently or flagrantly neglects to carry out its obligations under
this Contract;

(5) neglects or refuses to remove materials or to perform a new work

that has been rejected as defective or unsuitable; or

(6) sub-contracts any part of this Contract without approval by the

Procuring Entity.

d. The Contractor causes a fundamental breach of this Contract.

Fundamental breaches of Contract shall include, but shall not be limited
to, the following:

(l) The Contractor stops work for twenty eight (28) days
when no stoppage of work is shown on the current Program of
Work and the stoppage has not been authorized by the Procuring
Entity's Representative.

(2) The Contractor is declared bankrupt or insolvent as

determined with finality by a court of competent jurisdiction. In
this event, termination will be without compensation to the
Contractor, provided that such termination will not prejudice or
affect any right of action or remedy which has accrued or will
accrue thereafter to the Procuring Entity and/or the Contractor.
In the case of the Contractor's insolvency, any Contractor,s
Equipment which the Procuring Entity instructs in the notice is to
be used until the completion of the Work.

(3) The Procuring Entity's Representative gives Notice that

failure to correct a particular Defect is a fundamental breach of
Contract and the Contractor fails to correct it within a reasonable
period of time determined by the Procuring Entity,s
Representative.

(4) The Contractor does not maintain a Security, which is

required.
 (5) The Contractor has delayed the completion of the Works
by the number of days for which the maximum amount of
liquidated damages can be paid, as defined in the GCC Clause 9.

(6) In case it is determined prima facie by the Procuring

Entity that the Contractor has engaged, before or during the
implementation of the contract, in unlawful deeds and behaviors
relative to contract acquisition and implementation, such as, but
not limited to, the following:

(a) comrpt, fraudulent, collusive, coercive,

and obstructive practices as defined in ITB Clause
3.10, unless otherwise specified in the SCC;
(b) drawing up or using forged documents;

(c) using adulterated materials, means or

methods, or engaging in production contrary to
rules of science or the trade; and

(d) any other act analogous to the foregoing

The Procuring Entity or the Funding Source will seek to impose

the maximum civil, administrative and,/or criminal penalties
available under the applicable law on individuals and
organizations deemed to be involved with comrpt, fraudulent, or
coercive practices.

16.2 When persons lrom the Procuring Entity gives notice of a fundamental
breach to the Procuring Entity's Representative in order to terminate the
existing contract for a cause other than those listed under GCC Clause 16.1-e,
the Procuring Entity's Representative shall decide whether the breach is
fundamental or not.

16.3 If this Contract is terminated, the Contractor shall stop work

immediately, make the Site safe and secure, and leave the Site as soon as
reasonably possible.

16-4 All materials on the Site, Plant, Equipment, and Works shall be deemed
to be the property ofthe Procuring Entity if this Contract is terminated because
of the Contractor's default.

17. Termination for Default of Procuring Entity

17.1 The Contractor may terminate this Contract with the Procuring Entity when any of
the following conditions attend its implementation:
 a. Ifthe works are completely stopped for a continuous period ofat
least sixty (60) calendar days through no fault of the Contractor, due to
any of the following reasons:

(l) Failure of the Procuring Entity to deliver, within a

reasonable time, supplies, materials, right-of-way, or other items
it is obligated to fumish under the terms of this Contract; or

(2) The prosecution of the Work is disrupted by adverse

peace and order situation, as certified by the Armed Forces of the
Philippines Provincial Commander and approved by the
Secretary of National Defense.

b. The Procuring Entity causes a fundamental breach of this

Contract. Fundamental breaches of Contract shall include. but shall not
be limited to, the following:

(l) The Procuring Entity's Representative instructs the

Contractor to delay the progress of the Works, and the
instruction is not withdrawn within twenty eight (28) days.
(2) A payment certified by the Procuring Entity's
Representative is not paid by the Procuring Entity to the
Contractor within eighty four (84) days from the date of the
Procuring Entity's Representative's certificate.

17.2 When persons from the Contractor gives notice of a fundamental breach to the
Procuring Entity's Representative in order to terminate the existing conftact for
a cause other than those listed under GCC Clause I 7. l -b, the Procuring Entity's
Representative shall decide whether the breach is fundamental or not.

18. Termination for Convenience

The Procuring Entity may terminate this Contract, in whole or in part, at any time for
its convenience. The HoPE may terminate this Contract for the convenience of the
Procuring Entity if he has determined the existence of conditions that make Project
Implementation economically, financially or technically impractical and/or
unnecessary, such as, but not limited to, fortuitous event(s) or changes in law and
National Govemment policies.

19. Procedure for Termination of Contracts

19.1 The following provisions shall govern the procedures for the termination of this
Contract:

a. Verification. U pon receipt of a written report of acts or causes

which may constitute grounds for termination as aforementioned. or
upon its own initiative, the Procuring Entity's Representative shall,
within a period of seven (7) calendar days, verifu the existence of such
ground(s) and cause the execution ofa Verified Report, with all relevant
evidence attached.

b. Notice of Termination. Upon recommendation by the Procuring

Entity's Representative, the HoPE shall terminate this Contract only by
a written Notice of Termination to the Contractor. The Notice shall state:

(1) that this Contract is being terminated for any of the

grounds aforementioned, and a statement of the acts that
constitute the ground(s).

(2) the extent of termination, whether in whole or in part;

(3) an instruction to the Contractor to show cause as to why

this Contract should not be terminated; and

(4) special instructions ofthe Procuring Entity, ifany

The Notice of Termination shall be accompanied by a copy of the Verified

Report.

c. Show Cause. Within a period of seven (7) calendar days from

receipt of the Notice of Termination, the Contractor shall submit to the
HoPE a verified position paper showing cause as to why the Contract
should not be terminated. If the Contractor fails to do so, the HoPE shall
issue a written Notice of Decision confirming the Notice of Termination
ofthe Contract.

d. Withdrawal of Notic e of Termination The Procuring Entity

may, at anytime before receipt of the Contractor,s verified position
paper, withdraw the Notice of Termination if it is determined that
certain items or works subject of the Notice had been completed,
delivered, or performed before the Contractor's receipt ofthe Notice.

e. Notice of Decision. Within a non-extendible period of ten (10)

calendar days from receipt of the verified position paper, the HopE shall
serve the Contractor his written Notice of Decision to confirm or
withdraw the Notice ol Termination. If the Notice of Decision is to
confirm the Notice of Termination, then this Contract is deemed
terminated from receipt by the Contractor of the said Notice of Decision.
The termination shall be based only on the grounds stated in the Notice
of Termination.
 f. Review Committee. Th e HoPE may create a Contract
Termination Review Commiftee (CTRC) to assist him in the discharge
of this function. All decisions recommended by the CTRC shall be
subject to his approval.

19.2 Pursuant to Section 69(f.1 ofRA 9184 and without prejudice to the imposition of
additional administrative sanctions as the intemal rules of the agency may
provide and./or further criminal prosecution as provided by applicable laws, the
Procuring Entity shall impose on conffactors after the termination of the
contract the penalty of suspension for one (l) year for the first offense,
suspension for two (2) years for the second offense from participating in the
public bidding process, for violations committed during the contract
implementation stage, which include but not limited to the following:

a. Failure of the contractor, due solely to his fault or negligence, to

mobilize and start work or performance within the specified period in
the Notice to
Proceed ("NTP");

b. Failure by the contractor to fully and faithfully comply with its

contractual obligations without valid cause, or failure by the contractor
to comply with any wdtten lawful instruction of the Procuring Entity or
its representative(s) pursuant to the implementation of the confiact. For
the procurement of infrastructure projects or consultancy contracts,
lawfirl instructions include but are not limited /o the following:

(l) Employmentofcompetenttechnicalpersonnel,competent
engineers and/or work supervisors:

(2) Provision of waming signs and barricades in accordance

with approved plans and specifications and contract provisions;

(3) Stockpiling in proper places of all materials and removal

from the project site of waste and excess materials, including
broken pavement and excavated debris in accordance with
approved plans and specifications and contract provisions;

(4) Deployment of committed equipment, facilities, support

staff and manpower; and

(5) Renewal ofthe effectivity dates ofthe performance security

after its expiration during the course of contract implementation.
 c. Assignment and subcontracting of the contract or any part
thereof or substitution of key personnel named in the proposal without
prior written approval by the Procuring Entity.

d. Poor performance by the contractor or unsatisfactory quality

and/or progress of work arising from his fault or negligence as reflected
in the Constructor's Performance Evaluation System ("CPES") rating
sheet. In the absence of the CPES rating sheet, the existing performance
monitoring system of the Procuring Entity shall be applied. Any of the
following acts by the Contractor shall be construed as poor performance:

(1) Negative slippage of 15% and above within the critical path
of the project due entirely to the fault or negligence of the
contractor; and

(2) Quality of materials and workmanship not complying with

the approved specifications arising from the contractor's fault or
negligence.

e. Willful or deliberate abandonment or non-performance of the

project or contract by the contractor resulting to substantial breach
thereof without lawful and,/or just cause.

In addition to the penalty of suspension, the Performance Security posted by the

contractor shall also be forfeited.

20. Force Majeure and Release from Performance

20.1 For purposes of this Contract the terms 'force majeure" and "fortuitous event"
may be used interchangeably. In this regard, a fortuitous event or.force majeure
shall be interpreted to mean an event which the Contractor could not have
foreseen, or which though foreseen, was inevitable. It shall not include ordinary
unfavorable weather conditions, and any other cause the effects of which could
have been avoided with the exercise ofreasonable diligence by the Contractor.

20.2 If this Contract is discontinued by an outbreak of war or by any other event

entirely outside the control of either the Procuring Entity or the Contractor, the
Procuring Entity's Representative shall certify that this Contract has been
discontinued. The Contractor shall make the Site safe and stop work as quickly
as possible after receiving this certificate and shall be paid for all portions of the
Works carried out before receiving it and for any part of the Works carried out
afterwards to which a commitment was made.
 20.3 If the event continues for a period of eighty four (84) days, either party may give
the other a Notice of Termination, which shall take effect twenty eight (28) days
after the receipt of the Notice.

20.4 After termination, the Contractor shall be entitled to payment of the unpaid
balance of the value of the Works executed and of the materials and Plant
reasonably delivered to the Site, adjusted by the following:

a. Any sum to which the Contractor is entitled under GCC Clause

28

b. The cost of his suspension and demobilization

c Any sum to which the Procuring Entity is entitled

20.5 The net balance due shall be paid or repaid within a reasonable time period from the
date of the Notice oI Termination.

21. Payment on Termination

21.1 If the Contract is terminated because of a fundamental breach of Contract by the

Contractor, the Procuring Entity's Representative shall issue a certificate for the
value of the work done and materials ordered less advance payments received
up to the date of the issue of the certificate and less the value of the work not
completed. Additional liquidated damages shall not apply. If the total amount
due to the Procuring Entity exceeds any payment due to the Contractor, the
difference shall be a debt payable to the Procuring Entity.

21.2lf the Contract is terminated for the Procuring Entity's convenience or because of
a fundamental breach of Contract by the Procuring Entity, the Procuring
Entity's Representative shall issue a certificate for the value of the work done,
materials ordered, the reasonable cost of removal of Contractor's equipment,
and the Contractor's costs of protecting and securing the Works, less advance
payments received up to the date of the certificate.

21.3 The net balance due shall be paid or repaid within twenty eight (28) days fiom the
notice of termination.

21.4 lf the Contractor has terminated the Contract under GCC Clause 17 or 18, the
Procuring Entity shall promptly retum the Performance Security to the
Contractor.
22. Resolution of Disputes
22.1 \f any dispute or difference of any kind whatsoever shall arise between the parties
in connection with the implementation of the contract covered by RA 91 84 and
its IRR, the parties shall make every effort to resolve amicably such dispute or
difference by mutual consultation.

22.2 If the Contractor believes that by the Procuring Entity's

a decision taken
Representative was either outside the authority given to the Procuring Entity's
Representative by this Contract or that the decision was wrongly taken, the
decision shall be referred to the Arbiter indicated in the SCC within fourteen
(14) days ofthe notification ofthe Procuring Entity's Representative's decision.

22.3 Any and all disputes arising from the implementation of this Contract covered by
the RA 9184 and its IRR shall be submitted to arbitration in the Philippines
according to the provisions of RA 876, otherwise known as the "Arbitration
Law" and RA 9285, otherwise known as the "Alternative Dispute Resolution
Act of 2004. However, disputes that are within the competence of the
Construction Industry Arbitration Commission to resolve shall be refened
thereto. The process of arbitration shall be incorporated as a provision in this
Contract that will be executed pursuant to the provisions of RA 9184 and its
IRR. By mutual agreement, however, the pa(ies may agree in writing to resort
to other altemative modes of dispute resolution.

23. Suspension of Loan, Credit, Grant, or Appropriation

In the event that the Funding Source suspends the Loan, Credit, Grant, or Appropriation
to the Procuring Entity, from which part of the payments to the Contractor are being
made:

a. The Procuring Entity is obligated to notify the Contractor of such

suspension within seven (7) days of having received the suspension notica.

b. If the Contractor has not received sums due it for work already done
within forty five (45) days from the time the Contractor's claim for payment has
been certified by the Procuring Entity's Representative, the Contractor may
immediately issue a suspension of work notice in accordance with GCC Clause
44.

24. ProcuringEntity'sRepresentative'sDecisions
24.1 Except where otherwise specifically stated, the Procuring Entity's Representative
shall decide contractual matters between the Procuring Entity and the
Contractor in the role representing the Procuring Entity.
 24.2 The Procuring Entity's Representative may delegate any of his duties and
responsibilities to other people, except to the Arbiter, after notifying the
Contractor, and may cancel any delegation after notifying the Contractor.
25. Approval of Drawings and Temporary Works by Procuring Entity's
Representative

25.1 All Drawings prepared by the Contractor for the execution of the Temporary
Works are subject to prior approval by the Procuring Entity's Representative
before their use.

25.2 The Contractor shall be responsible for the design of Temporary Works.

25.3 The Procuring Entity's Representative's approval shall not alter the Contractor,s
responsibility for the design olthe Temporary Works.

25.4 The Contractor shall obtain approval by third parties of the design of the Temporary
Works, when required by the Procuring Entity.

26 Acceleration Ordered by Procuring Entity's Representative

26.1 When the Procuring Entity wants the Contractor to finish the Works before the
Intended Completion Date, the Procuring Entity's Representative shall obtain a
priced proposal for achieving the necessary acceleration from the Contractor. If
the Procuring Entity accepts these proposals, the Intended Completion Date will
be adjusted accordingly and confirmed by both the Procuring Entity and the
Contractor.

26.2 \f rhe confiactor's Financial Proposals for an acceleration are accepted by the
Procuring Entity, they are incorporated in the Contract price and treated as a
Variation.

27. Extension of Intended Completion Date

27 -1 The Procuring Entity's Representative shall extend the Intended Completion Date
if a variation order is issued which makes it impossible for the Intended
completion Date to be achieved by the contractor without taking steps to
accelerate the remaining work, which would cause the contractoi to incur
additional costs.No payment shall be made for any event which may warrant the
extension ofthe Intended Completion Date.

27.2 The Procuring Entity's Representative shall decide whether and by how much to
extend the Intended Completion Date within twenty one (21) days of the
contractor asking the Procuring Entity's Representative for a decision thereto
after fully submitting all supporting information. If the contractor has failed to
give an early warning of a delay or has failed to cooperate in dealing with a
 delay, the delay by this failure shall not be considered in assessing the new
Intended Completion Date.
28. Contractor's Right to Claim
If the Contractor incurs a cost as a result of any of the events under GCC Clause 13,
the Contractor shall be entitled to the amount of such cost. If as a result of any of the
said events, it is necessary to change the Works, this shall be dealt with as a Variation
Order.

29. Dayworks
29.1 Subject to GCC Clause 44 on Variation Orders, and if applicable as indicated in
the SCC, the Dayworks rates in the Contractor's Bid shatl be used for small
additional amounts of work only when the Procuring Entity's Representative
has given written instructions in advance for additional work to be paid for in
that way.

29.2 All work to be paid for as Dayworks shall be recorded by the Contractor on forms
approved by the Procuring Entity's Representative. Each completed form shall
be verified and signed by the Procuring Entity's Representative within two days
ofthe work being done.

29.3 The Contractor shall be paid for Dayworks subject to obtaining signed Dayworks
forms.

30. Early Warning

30.1 The Contractor shall wam the Procuring Entity's Representative at the earliest
opportunity of specific likely future events or circumstances that may adversely
affect the quality of the Work, increase the Contract Price, or delay the
execution of the Works. The Procuring Entity's Representative may require the
Contractor to provide an estimate of the expected effect of the future event or
circumstance on the Contract Price and Completion Date. The estimate shall be
provided by the Contractor as soon as reasonably possible.

30.2 The Contractor shall cooperate with the Procuring Entity's Representative in
making and considering proposals for how the effect of such an event or
circumstance can be avoided or reduced by anyone involved in the Work and in
carrying out any resulting instruction of the Procuring Entity's Representative.

31. Program of Work

31.1 Within the time stated in the SCC, the Contractor shall submit to the Procuring
Entity's Representative for approval a Program of Work showing the general
methods, arrangements, order, and timing for all the activities in the Works,
including a PERT/CPM network diagram.
 31.2 An update of the Program of Work shall the show the actual progress achieved on
each activity and the effect of the progress achieved on the timing of the
remaining work, including any changes to the sequence of the activities.

31.3 The Contractor shall submit to the Procuring Entity's Representative for approval an
updated Program of Work at intervals no longer than the period stated in the
SCC. If the Con[actor does not submit an updated Program of Work within
this period, the Procuring Entity's Representative may withhold the amount
stated in the SCC from the next payment certificate and continue to withhold
this amount until the next payment after the date on which the overdue Program
of Work has been submitted.

31.4 The Procuring Entity's Representative's approval of the Program of Work shall
not alter the Contractor's obligations. The Contractor may revise the Program
of Work and submit it to the Procuring Entity's Representative again at any
time. A revised Program of Work shall show the effect of any approved
Variations.

31.5 When the Program of Work is updated, the Contractor shall provide the Procuring
Entity's Representative with an updated cash flow forecast. The cash flow
forecast shall include different currencies, as defined in the Contract, converted
as necessary using the Contract exchange rates.

31,6 All Variations shall be included in updated Program of Work produced by the
Contractor.

32. ManagementConferences
32.1 Either the Procuring Entity's Representative or the Contractor may require the
other to attend a Management Conference. The Management Conference shall
review the plans for remaining work and deal with matters raised in accordance
with the early waming procedure.

32.2 The Procuring Entity's Representative shall prepare the minutes of Management
conferences and provide copies of the minutes to those attending the
Conference. The responsibility of the parties for actions to be taken shall be
decided by the procuring Entity's Representative either at the Management
conference or after the Management conference and stated in writinf to all
who attended the Conference.

33. Bill of Quantities

33.r The Bill of Quantities(Boe), shown in ANNEX II-r.rJof
these Bidding
Documents, shall contain the items of work for the construction,
installation]
testing, and commissioning of the works to be done
by the contractor.
 33.2 The BOQ is used to calculate the Contract Price. The Contractor shall be paid for
the actual quantity of each pay item, certified by the Procuring Entity's
Representative as accomplished, at the unit price in the Bill of Quantities for
that item.

33.3 If the final quantity of any pay item accomplished differs from the original
quantity in the BOQ for that item and is not more than twenty five percent
(25%) of that original quantity, provided the aggregate changes for all work
items do not exceed ten percent (10%) of the Contract Price, the Procuring
Entity's Representative shall make the necessary adjustments to allow for the
changes, subject to applicable laws, rules, and regulations.
33.4 Ifrequested by the Procuring Entity's Representative, the Contractor shall provide
the Procuring Entity's Representative a detailed cost breakdown of any unit
price or rate in the BOQ.

34, Instructions, Inspections and Audits

34.1 The Procuring Entity's personnel shall at all reasonable times during construction
of the Works be entitled to examine, inspect, measure and test the materials and
workmanship, and to check the progress of the construction.

34.2 lf the Procuring Entity's Representative instructs the Contractor to cary out a test
not specified in the Specifications to check whether any work has a defect and
the test shows that it does, the Contractor shall pay for the test and any samples.
Ifthere is no defect, the test shall be a Compensation Event.

34.3 The Contractor shall permit the Funding Source named in the SCC to inspect the
accounts and records of the Contractor relating to its performance and to have
them audited by auditors approved by the Funding Source, if so required by the
Funding Source.

35. Identification of Defects

The Procuring Entity's Representative shall check the Contractor's work and notifu the
Contractor of any Defects that are found. Such checking shall not affect the
Contractor's responsibilities. The Procuring Entity's Representative may instruct the
Contractor to uncover Defects and test any work that the Procuring Entity's
Representative considers below standard and defective.

36. Cost of Repairs

Loss or damage to the Works or Materials to be incorporated in the Works between the
Start Date and the end of the Defects Liability Period shall be remedied by the
Contractor at the Contractor's expense if
the loss or damage arises from the
Contractor's acts or omissions.
37 . Correction of Defects
37.1 The Procuring Entity's Representative shall give notice to the Contractor of any
defects before the end ofthe Defects Liability Period, which is one (1) day from
the Completion Date up to the date of issuance ofthe Certificate of Acceptance
by the Procuring Entity.

37.2 Every time notice of a Defect is given, the Contractor shall correct the notified
defect within the length of time specified in the Procuring Entity's
Representative's notice.

37.3 The Contractor shall correct the Defects which it notices itself before the end ofthe
Defects Liability Period.
37.4 The Procuring Entity's Representative shall certify that all Defects have been
corrected. If the Procuring Entity's Representative considers that correction ofa
Defect is not essential, he can request the Contractor to submit a quotation for
the corresponding reduction in the Contract Price. If the Procuring Entity's
Representative accepts the quotation, the corresponding change shall be covered
by a Variation Order.

38. UncorrectedDefects
38.1 The Procuring Entity shall give the Contractor at least fourteen (14) days notice of
its inlention to use a third party to correct a Defect. If the Contractor itself does
not correct the Defect within that period, the Procuring Entity may have the
Defect corrected by the third party. The cost of the correction will be deducted
from the Contract Price.

38.2 The use of a third party to correct Defects that are unconected by the Contractor
shall in no way relieve the contractor of its liabilities and warranties under the
Contract.

39. Advance Payment

39.1 The Procuring Entity shall, upon a written request of the Contractor which shall be
submitted as a contract document, make an Advance payment to the contractor
in an amount not to exceed fifteen percent (15%) of the total Contract price, to
be made in lump sum or, at most, two installments according to a schedule
specified in the SCC. The advance payment, if requested in t,io installments,
shall be subject to the following prerequisites:

a. The first installment shall require the written request ofthe

Contractor and submission of the instrument prescribedin
GCC Clause
39.2.
 b. The second installment shall require a certification ofthe Project
Engineer ofthe Procuring Entity that the Contractor has mobilized major
equipment according to the approved Equipment Utilization Schedule.

39.2 The Advance Payment shall be made only upon the submission by the
Contractor to and acceptance by the Procuring Entity of an irrevocable standby
letter ofcredit of equivalent value from a commercial bank, a bank guarantee or
a surety bond callable upon demand, issued by a surety or insurance company
duly licensed by the Insurance Commission and confirmed by the Procuring
Entity.

39.3 The Advance Payment shall be repaid by the Contractor by deducting,

from periodic progress payments to be made to the Contractor, a percentage
equal to the percentage of the total Contract Price used for the Advance
Payment.

39.4 The Contractor may reduce its standby letter of credit or guarantee
instrument by the amounts refunded by the Monthly Certificates in the advance
payment.
40. Monthly Statements or Progress Billings
40.1 The Contractor shall submit to the Procuring Entity's Representative, after the end
of each month, a Statement of Work Accomplished (SWA) or Progress Billing,
showing the amounts which the Contractor consider itself to be entitled up to
the end ofthe month, to cover:

a. the cumulative value of the Works it executed to date, based on

the items in the Bilt of Quantities; and

b. adjustments made for approved Variation Orders executed.

40.2 Except as otherwise stipulated in the SCC, materials and equipment delivered on the
site but not completely put in place shall not be included for payment.

41. Monthly Certificates and Progress Payments

4l.l The Procuring Entity's Representative shall check the Contractor's monthly SWA
and certify the amount to be paid to the Contractor.

41.2 The Procuring Entity's Representative shall check the Contractor's monthly
statement and certifl, the amount to be paid to the Contractor.

41.3 The value of Work executed shall

a be determined by the Procuring Entity's Representative;

 b. comprise the value of the quantities of the items in the Bill of
Quantities completed; and

c. include the valuations ofapproved variations.

41.4 The Procuring Entity's Representative may exclude any item certified in
a previous certificate or reduce the proportion ofany item previously certified in
any certificate in the light of later information.

41.5 The Procuring Entity's Representative shall deduct the following from
the certified gross amounts to be paid, resulting in the net amount payable to the
Contractor as Progress Payment:

a. Cumulative value of the Work previously certified and paid for.

b. Portion of the advance payment to be recouped for the month

under the present certificate.

c Retention money in accordance with GCC Clause 42.

d Amount to cover approved third party liabilities

e. Amount to cover uncorrected Defects in the Works.

f. Value ofany work item presently certified but already paid for
under an earlier certification.

41.6 The Procuring Entity shall pay the Contractor the said net amounts
certified by the Procuring Entity's Representative within twenty eight (28) days
from the date each certificate was issued. No payment of interest for delayed
payments and adjustments shall be made by the Procuring Entity.

41.7 The first progress payment may be paid by the Procuring Entity to the
Contractor provided that at least twenty percent (20%) of the work has been
accomplished as certified by the Procuring Entity's Representative.

41.8 Items of the Works for which a price of "0" (zero) has been entered will
not be paid for by the Procuring Entity and shall be deemed covered by other
rates and prices in the Contract.

41.9 The Procuring Entity shall pay the Contractor a cumulative gross
amount not exceeding ninety percent (90%) of the total Contract price, since the
remainder shall serve as the ten percent (10%) retention money, as provided in
GCC Clause 42.
42. Retention
42.1The Procuring Entity shall retain from each progress payment ten percent (10%) of
such payment, referred to as the "retention money." Such retention money shall
be based on the total amount due to the Contractor prior to any deduction and
shall be retained from every Progress Payment until fifty percent (50%) of the
value of the Works, as determined by the Procuring Entity, is completed. If,
after fifty percent (50%) completion, the Works are satisfactorily done and on
schedule, no additional retention shall be made; otherwise, the ten percent
(10%) retention shall again be imposed using the rate specified therefor.

42.2 The total retention money shall be due for release upon final acceptance of the
Works. The Contractor may, however, request the substitution of the retention
money for each progress billing with an irrevocable standby letter ofcredit from
a commercial bank, bank guarantee and/or surety bond callable on demand, of
amounts equivalent to the retention money substituted for and in a form
acceptable to the Procuring Entity. The Procuring Entity shall allow such
substitution provided that the Contract is on schedule and is satisfactorily
undertaken. The said inevocable standby letter ol credit, bank guarantee and/or
surety bond, to be posted in favor of the Procuring Entity, shatl be valid for a
duration to be determined by the Procuring Entity and shall answer for the
purpose for which the retention is intended, i.e., to cover uncorrected discovered
Defects and third party liabilities.

42.3 On completion of the whole Works, the Contractor may substitute retention money
with an "on demand" Bank guarantee in a form acceptable to the Procuring
Entity.
43 Variation Orders
43.1 Variation Orders (VOs) shall be subject to the provisions of Annex E of RA
9184lRR and DPWH DO 28, series of 2015. may be issued by the Procuring
Entity to cover any increase or decrease in quantities, including the introduction
of new work items not included in the original Contract or reclassification of
work items due to change of plans, design or alignment to suit actual field
conditions, resulting in disparity between the preconstruction plans used for
purposes ofbidding and the "as staked plans" or construction drawings prepared
after ajoint survey by the Contractor and the Procuring Entity after award ofthe
Contract. The cumulative amount of the positive or additive VOs, however,
shall not exceed ten percent (10%) ofthe original Contract cost. The addition or
deletion of works shall be within the general scope of the Contract as bid and
awarded. The scope ofthe Works shall not be reduced so as to accommodate a
positive VO.

43.2 A deductive VO may be allowed only if it would not significantly impair the
functionality ofthe original design, i.e., it must not reduce the size ofthe facility
by more than ten percent (10%) of the original scope (e.g., shortening of road
 length) or must not make the facility unsafe (e.g., removal of guard rails) or
structurally unstable (e.g., removal of a column) or unusable (e.g., removal of a
bridge abutment).

43.3 A VO in the form of a Change Order may be issued by the Procuring Entity to
cover any increase or decrease in quantities of original Work items in the
Contract.

43.4 A VO in the form an Extra Work Order may be issued by the Procuring Entity to
cover the introduction of new work necessary for the completion, improvement
or protection of the project which were not included as items of work in the
original Contract, such as where there are subsurface or latent physical
conditions at the Site differing materially from those indicated in the Contract,
or where there are duly unknown physical conditions at the Site of an unusual
nature differing materially from those ordinarily encountered and generally
recognized as inherent in the Works or character provided for in the Contract.

43.5 Any cumulative positive VO beyond ten percent (10%) shall be the subject of
another contract to be bid out if the works are separable from the original
Contract.

43.6 In claiming for any VO, the Contractor shall, within seven (7) calendar days after
such work has been commenced or after the circumstances leading to such
condition(s) leading to the extra cost, and within twenty-eight (28) calendar
days deliver a written communication giving full and detailed particulars of any
extra cost in order that it may be investigated at that time. Failure to provide
either of such notices in the time stipulated shall constitute a waiver by the
contractor for any claim. The Contractor shall not "accumulate" claims for VOs
before submitting them to the Procuring Entity for investigation and processing.

43.7 The preparation and submission of VOs shall be as follows:

a. If the Procuring Entity's Representative/Project Engineer finds
that a Variation Order is necessary, he shall prepare the proposed Order,
accompanied with the Notice submifted by the Contractor, the plans
therefor, his computations on the quantities of the additional, reduced or
modified works involved per item indicating the specific stations where
such works are needed, the date of his inspections and investigations
thereon, and the log book thereof, and a detailed estimate ofthe unit cost
of such items of work, together with his justifications for the Variation
Order, and shall submit the sarne to the HoPE for approval.

b. The HoPE or his duly authorized representative, upon receipt of

the proposed Change Order or Extra Work Order, shall immediately
instruct the appropriate technical staff or office of the Procuring Entity
to conduct an on-the-spot investigation to verify the need for the Work
 to be prosecuted and to review the proposed Change Order or Extra
Work Order.

c. The technical staff or appropriate office of the Procuring Entity

shall submit a report of their findings and recommendations, together
with the supporting documents, to the HOPE or his duly authorized
representative for consideration.

d. The HoPE or his duly authorized representative, acting upon the

recommendation of the technical staff or appropriate office of the
Procuring Entity, shall approve the Change Order or Extra Work Order,
after being satisfied that the same isjustified, necessary, and in order.

d. The timeframe for the processing of VO from the preparation up to the

approval by the HoPE concemed shall not exceed thirty (30) calendar
days.

43.8 Work under VOs shall be valued and paid as follows

a. At the unit prices for the same items in this Contract.

b. In the absence of unit prices for the same items rates in this
Contract, at prices or rates obtained from those of similar or related
items in this Contract.

c. Failing the above, at appropriate new unit prices or rates equal to

or lower than current market rates and to be agreed upon by both parties
and approved by the HoPE.

44. Punch List

Once the Contract reaches an accomplishment of ninety five percent (95%) of the total
Contract Works, the Procuring Entity may create an inspectorate team to make a
preliminary inspection and submit a punch list to the Contractor in preparation for the
total completion of the Works. The punch list shall contain, among other things, the
remaining unfinished portions of the works, deficiencies in the works for necessary
corrections, and the specific time to futty complete the whole works considering the
approved remaining Contract time. This, however, shall not preclude any claim of the
Procuring Entity for liquidated damages.

45 Suspension of Work

45.1 In accordance with DPWH Do 100, series of 2015, the procuring Entity, through its
Project Engineer/Engineer's Representative, shall have the authority to isiue a
Work Suspension Order to the Contractor suspend the work wholly or partly by
written order for such period as may be deemed necessary, o, of tna
following grounds: -y
 a. Force majeure or any fortuitous event that has taken place, which
inflicts extensive damage and/or makes it difficult to proceed with the
work, such as a devastating earthquake or flood.

b. Failure on the part of the Contractor to correct bad conditions

which are unsafe for workers or for the general public.

c. Failure of the contractor to carry out valid orders given by the

Procuring Entity or to perform any provisions of the contract.

d. Adjustments of plans to suit field conditions as found necessary

during construction.

e. Major right-of-way (ROW) problems which prohibit the contractor

from performing work in accordance with the approved construction
schedule.

f. Peace and order conditions which makes it extremely dangerous, il

not impossible to work, as certified in writing by the Philippine National
Police (PNP) Station Commander which has responsibility over the
affected area, and confirmed by the Department of Interior and Local
Government (DILG) Regional Director.

g. Major variations initiated by the Govemment in the scope of the

contract during its implementation to suit changes in physical and
economic conditions.

The Contractor shall immediately comply with such order to suspend the Works
wholly or partly.

45.2 The Contractor or its duly authorized representative shall have the right to suspend
work operation on any or all projects/activities along the critical path of
activities after fifteen (15) calendar days from date of receipt of written notice
from the Contractor to the district engineer/regional director/consultant or
equivalent official, as the case may be, on any ofthe following grounds:

a. There exist righlof-way problems which prevent the Contractor

from performing work in accordance with the approved construction
schedule.
b. Requisite construction plans which must be owner-fumished are
not issued to the contractor precluding any work called for by such plans.

c. Peace and order conditions make it extremely dangerous, if not

possible, to work. However, this condition must be certified in writing by
the Philippine National Police (PNP) station which has responsibility over
 the affected area and confirmed by the Department of Interior and Local
Govemment (DILG) Regional Director.

d. There is failure on the part of the Procuring Entity to deliver

governmentfumished materials and equipment as stipulated in the
contract.

e. Delay in the payment of Contractor's claim for progress billing

beyond forty-five (45) calendar days from the time the Contractor's claim
has been certified to by the Procuring Entity's authorized representative
and the documents are complete unless there are justifiable reasons thereof
which shall be communicated in writing to the Contractor.

45.3 The contractor shall immediately demobilize its equipment and

manpower upon its receipt of the Work Suspension Order and to remobilize the
same upon the lifting by the Procuring Entity the Work Suspension Order
through a Work Resumption Order.

45.4 The issuance of a Work Suspension Order shall not be an automatic

contract time extension. A corresponding time extension, complete with the
documentary requirements in accordance with DO No. 52, series of2012,has to
be approved by the authorized DPWH official in lieu of suspension, subject to
evaluation to consider pre-determined unworkable days, bond extension, quit
claim for damages, and their effect on the approved PERT/CPM schedule in
order to reflect the official revised contract time and expiry date as a result of
such suspension. If the suspension is due to any fault of the contractor, no
contract time extension shall be granted.

46, Extension of Contract Time

46.1 Extension of the Contract Time shall be subject to the provisions of DPWH DO 100,
series of20l5 and the provisions of this GCC Clause 46.

46.2 Should the amount of additional work under an approved Variation Order or other
special circumstances of any kind whatsoever occur such as to fairly entitle the
Contractor to an extension of Contract Time, the Procuring Entity shall
determine the amount of such extension; provided that the Procuring Entity is
not bound to take into account any claim for an extension of time unless the
Contractor has, prior to the expiration of the Contract time and within thirty (30)
calendar days after such work has been commenced or after the circumstances
leading to such claim have arisen, delivered to the Procuring Entity notices in
order that it could have investigated them at that time. Failure to provide such
notice shall constitute
 a waiver by the Contractor of any claim. Upon receipt of full and detailed
particulars, the Procuring Entity shall examine the facts and extent ofthe delay
and shall extend the Contract time to complete the contract work when, in the
Procuring Entity's opinion, the findings of facts justify an extension.

46.3 No extension of contract time shall be granted the Contractor due to (a) ordinary
unfavorable weather conditions and (b) inexcusable failure or negligence of
Contractor to provide the required equipment, supplies or materials.

46.4 Extension of contract time may be granted only when the affected activities fall
within the critical path of the PERTiCPM network.

46.5 No extension of contract time shall be granted when the reason given to support
the request for extension was already considered in the determination of the
original contract time during the conduct of detailed engineering and in the
preparation of the contract documents as agreed upon by the parties before
contract perfection.

46.6 Extension ofcontract time may be granted for any olthe following grounds:

a. Rainy/unworkable days considered unfavorable for the prosecution of

the works at the site, based on the actual conditions obtained at the site, in
excess of the number of rainy/unworkable days pre-determined by the
Procuring Entity in relation to the original contract time during the conduct
of detailed engineering and in the preparation of the contract documents as
agreed upon by the parties before contract perfection. In these cases, the
time extension shall be processed for approval only after the total number of
pre-determined rainy/unworkable days as indicated in the contract has been
fully utilized as duly certified by the Procuring Entity's Representative.

b. Equivalent period of delay due to major calamities such as exceptionally

destructive typhoons, floods and earthquakes, and epidemics, and for causes
such as non-delivery on time of materials, working drawings, or written
information to be fumished by the procuring Entity, non-acquisition of
permit to enter private properties within the righlof-way resulting in
complete paralyzation of construction activities, and other meritorious
causes as determined by the Procuring Entity,s Representative and approved
by the HoPE.

c. Shortage of construction materials, general labor strikes, and peace

and
order problems that disrupt construction operations through no fault
of the
Contractor, provided that they are publicly felt and certified by appropriate
govemment agencies such as Department of Trade and
tnaustry lbft;,
Department of Labor and Employment (DOLE), Department
of Interior and
Local Govemment (DILG), and Department of National Defense
(DND),
among others.
 46.7 The written consent of bondsmen must be attached to any request of the Contractor
for extension of Contract Time and submitted to the Procuring Entity
for consideration, and the validity of the Performance Security shall be
correspondingly extended.

47. Price Adjustment

Except for extraordinary circumstances as determined by the National Economic and
Development Authority (NEDA) and approved by the GPPB, no price adjustment shall
be allowed unless otherwise indicated in the SCC. Nevertheless, in cases where the
cost of tlle awarded contract is affected by any applicable new laws, ordinances,
regulations, or other acts of the GOP, promulgated after the date of bid opening, a
contract price adjustment shalt be made or appropriate relief shall be applied on a no
loss-no gain basis.

48. Certificates of Completion and Acceptance

48.1 The issuance of a Certificate of Completion shall be subject to the provisions of
DPWH DO 99, series of 2015.

a. Upon receipt oi notice from the contractor that the project is

completed, the HOPE shall instruct its Inspectorate Team to conduct an
inspection of the project and to submit its Completion Inspection Report
within fifteen (15) days, indicating any construction defects/deficiencies
detected and the conesponding measures that must be taken by the
contractor to correct them. If no defects/deficiencies are detected, the
report is considered as the Final Completion Inspection Report.

b. Based on the Inspection Report, the HOPE shall issue to the

Contractor a Notice of Defects/Deficiencies and Required Conective
Repair Works, with the instructions for the Contractor to commence the
repair works within seven (7) days and to complete the works within
thirty (30) days.

c. Upon receipt of advice from the Contractor that the defects and
deficiencies indicated in the said Notice have been corrected, the HOPE
shall instruct the Inspectorate Team to conduct an inspection of the
project and to submit its Completion Inspection Report within seven (7)
days. If the report shows that the defects/deficiencies have been
satisfactorily corrected, the report is considered as the Final Completion
Inspection Report. Otherwise, the process is repeated until the noted
defects/deficiencies have been satisfactorily conected.
 d. Upon the receipt ofthe Final Completion Inspection Report from
the Inspectorate Team, the HopE shall issue the Certificate of
Completion of the project, certifying that the Project has been
satisfactorily completed as of the date indicated in the Final Inspection
Report.

48.2 The Cerlificate of Acceptance shall be issued by the HoPE at the end of the
oneyear Defects Liability period, after all defects/deficiencies, if any, shall have
been repaired by the Contractor to the satisfaction of the same Inspectorate
Team of the Procuring Entity mentioned above and upon submission of the
Wananty Certificate by the Contractor in accordance with the provisions of
GCC Clause
12.The issuance of a Certificate of Acceptance shall be subject to the provisions
of DPWH DO 99, series of 2015.

a. Upon receipt of notice from the Contractor that the project is

ready for inspection after the one-year Defects Liability Period from the
issuance of the Certificate of Completion, the HoPE shall instruct its
Inspectorate Team to conduct an inspection of the project and to submit
its Inspection Report within fifteen (15) calendar days, indicating any
construction defects/deficiencies detected and the corresponding
measures that must be taken by the Contractor to correct them. If no
defects/deficiencies are detected, the report is considered as the Final
Acceptance Inspection Repon.

b. Based on the Inspection Report, the HoPE shall issue to the

Contractor a Notice of Defects/Deficiencies and Required Corrective
Repair Works, with the instructions for the Contractor to commence the
repair works within seven (7) calendar days and to complete the works
within ninety (90) days.

c. Upon receipt of advice from the contractor that the

defects/deficiencies in the said Notice have been corrected, the HoPE
shall instruct the Inspectorate Team to conduct an inspection of the
project and to submit its Acceptance Inspection Report within seven (7)
days. If the report shows that the defects/deficiencies have been
satisfactorily corrected, the report is considered as the Final Acceptance
Inspection Report. Otherwise, the process is repeated until the noted
defects/deficiencies have been satisfactorily corrected.

d. Upon the receipt ofthe Final Acceptance Report, the Head ofthe
I0 shall issue the Certificate of Acceptance.
49. Taking Over
The Procuring Entity shall take over the Site and the Works within seven (7) days from
the date the Procuring Entity's Representative issues a Certificate ofAcceptance.

50 As-Built Drawings and Operating and Maintenance Manuals

50.1 If As-Built Drawings and/or Operating and Maintenance Manuals are required, the
Contractor shall supply them by the dates stated in the SCC.

50.2 If the Contractor does not supply the said Drawings by the date stated in the SCC,
or if they do not receive the approval of the Procuring Entity's Representative,
the Procuring Entity's Representative shall withhold the amount stated in the
SCC from payments due to the Contractor.